In a classic story, Alex Lloyd wrote about an impromptu race he (and some unnamed compatriots) participated in on the way to a race at Sebring International Raceway. Entitled "Why a Rental Car is the Fastest Car You'll Ever Drive", the story includes Lloyd (in a Chevrolet Aveo) and cars "driven like a rental" with extreme results. One rental vehicle ends up in a ditch and at least five other rental cars sustain damage during the race. Lloyd writes off the incident as "Glad I took out the coverage" and "You do not need to replace the tires, brake pads or live with the damage you will undoubtedly cause by driving like a buffoon". And while it's an incredible read as a story, the coverage is not going to help and the renter will get stuck paying for the damage (but not necessarily living with it). Good stories sometimes need fact checks, so here we go!
Richard Petty probably didn't replicate this story.
Lloyd mentions paying for the coverage but we'll address all three means of potentially covering damage to a rental car -- damage waivers paid to the rental car company (which many renters don't need), rental car coverage provided by credit card issuers, and even personal automobile insurance policies. Each of the three explicitly excludes coverage for the behavior mentioned by Lloyd, intentional damage to cars and street racing (which isn't legal with or without vehicle damage).
The one thing rental car companies are good at is copying their competitors, especially if one comes up with ideas that either maximize revenue or minimize losses. Charging excessive fees for a damage waiver is an example of maximizing revenue. Putting in exclusions to that coverage is minimizing losses. Dollar is an easy example, simply stating "LDW does not apply if: (1) the renter uses the vehicle in violation of the Rental Agreement; (2) the renter fails to remove the keys, or close and lock all windows, doors and trunk, and the vehicle is stolen or vandalized; (3) the renter fails to notify us and the police immediately after the loss; and (4) the renter fails to pay the charges under the Rental Agreement; or (5) other exceptions as allowed by the applicable state or provincial law."
We doubt street racers called the police immediately to report the damage caused by the race but the key is in the first list item -- "uses the vehicle in violation of the Rental Agreement". The "prohibited use" provisions of a rental car contract which everyone signs at the time of pickup or when enrolling in the loyalty program prohibit (among many other items):
- Intentionally destroying, damaging or aiding in the theft of the car.
- Engaging in any willful or wanton misconduct,
- For any purpose that could be properly charged as a crime,
- In a speed test, speed contest, race, rally, speed endurance contest or demonstration.
Yep, the rental car companies have their bases covered and it's not just Hertz Global Holdings (Dollar, Hertz, and Thrifty). The other rental car companies have the same restrictions; Avis provides an example from the AvisBudget Group (Avis. Budget, and Payless) and National provides an example from Enterprise Holdings (Alamo, Enterprise, and National). A violation of the rental car contract immediately voids a damage waiver, no matter what the renter may have paid for said waiver.
Credit Card Rental Protection
Think the damage protection that comes included with one's credit card is going to help with intentional rental car damage? Nope. Those "included features" with credit cards come with their own litany of exclusions and restrictions that mirror the rental car companies' damage waiver terms.
American Express excludes "operation of the Rental Vehicle in violation of the terms and conditions of the Rental Agreement", Capital One excludes "any violation of the auto rental agreement or this benefit", and the Chase Sapphire cards exclude "any violation of the auto rental agreement". Like the rental car companies (and insurers) writing the damage waivers, the credit card companies are exceptional at copying exclusions when those minimize their potential outlays!
Personal Automobile Insurance
So an incident like Lloyd's comes down to personal automobile insurance, and the outcome is that a willingly damaged rental car will be paid by the renter. The only question is whether the payment will be indirect or direct:
- If the claim is covered by personal insurance, one's insurance premium is going to become very unfriendly (indirectly paying).
- If the claim is not covered by personal insurance, one's going to pay the rental car company (directly paying).
We're going to assume the latter is the most common path and hopped into our personal automobile policies. Traditional automobile insurers -- while frequently extending coverage to rental cars -- add their own exclusions. Along with repeated exclusions related to nuclear events, personal policies also have exclusions related to breaking the law and racing (whether scheduled or ad hoc). My personal policy has the following telling statement:
We do not cover any physical damage caused by an auto driven in or preparing for any racing, speed, or demolition contest or stunting activity of any nature, whether or not prearranged or organized.
While Lloyd's experience was a great read, it's not great in practice and would necessitate writing a five-figure check if attempted "in real life"! We lamented in an earlier post that some higher-end rental cars are largely impractical simply because of traffic restrictions and rental limitations. In the case of racing rentals as bumper cars, one would probably be better off taking just parts of the concept by visiting a local amusement park or entering a demolition derby. And those alternatives are probably safer for the drivers involved, other drivers, and pedestrians alike.